SuperMarkets Online's Secure Coupons Aim to Fight Fraud

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Setting what could be major precedents in the ever-changing world of the Internet coupon industry, SuperMarkets Online Inc. is driving consumers from its Web site to participating bricks-and-mortar supermarket retailers, where they can receive secure coupons in the form of Web Bucks.


In addition to building customer loyalty for participating retailers, the system aims to ensure security in an industry marred by fraud.


SuperMarkets Online, Greenwich, CT, lets consumers visit its Web site -- www.valupage.com -- and print a page of product savings posted by more than 12,000 participating supermarket retailers.


Consumers can take the printed page of savings -- or shopping list -- to participating local supermarkets. Upon purchasing the valued items, they must have a special barcode on the ValuPage scanned. Although the items are not discounted right away, shoppers are awarded a Web Buck, which can be used as cash to purchase any product on their next visit to the same supermarket.


The system minimizes the risk of online coupon fraud by requiring customers to bring the shopping list into the supermarket and have the barcode scanned by a special Catalina Printer, which recognizes the order before printing out Web Bucks. The printer would be immune to manipulation of the ValuPage, said Sue Klug, president of Catalina Marketing Corp., SuperMarkets Online's parent company, and chief marketing officer at SuperMarkets Online. Furthermore, consumers have to make a purchase before receiving discounts.


The program is a response in part to several incidents of fraud in the Internet coupon industry. A San Diego woman, for example, repeatedly copied an Internet coupon by SuperMarkets Online in 1996 and was able to obtain 1,000 packages of pantyhose. While the woman was later detained, the episode, among others, sent a message to the industry.


"With today's technology and the ability to manipulate printed images, people can change the look and feel of Internet coupons," Klug said.


The Catalina Printer also serves as an effective direct marketing tool, Klug said. Having access to more than 180 million supermarket transactions, the printer can ascertain, for instance, if a consumer used a coupon in the order. Based on that information, she said, the printer produces a page with a message inviting that consumer to the SuperMarkets Online Web site for more savings. The click-through rate has been 5 percent to 10 percent, she reported


"SuperMarkets Online is trying to find people [who] are promotionally sensitive," she said. "If [consumers] redeemed one coupon, they're probable users of ValuPage."


SuperMarkets Online also targets prospective online coupon users via the Internet, Klug said. The company sends a permission-based ValuPage e-mail to approximately 2.5 million registered users each week.


In an effort to generate more traffic to its Web site, which already records more than 1 million unique visitors each week, SuperMarkets Online has formed partnerships with several Internet companies. The company targets Web sites that cater to women, in particular, because that market still makes up nearly 75 percent of all coupon users, she said.


In one such alliance, SuperMarkets Online has partnered with America Online, Klug said. As part of a program called Food Wednesday, SuperMarkets Online supplies coupons to America Online's members.


"It makes a lot of sense to move some of their traffic to ours," she said.


Klug said SuperMarkets Online is merging its offline and online direct marketing efforts. Responding to affiliate retailers' increased interest in launching their own e-mail marketing campaigns, the company began combining the e-mail addresses it has compiled with customers' frequent shopper cards from retailers. With the customer's permission, Klug said, SuperMarkets Online is assessing the customer's purchase behavior and following up with a targeted e-mail. The company has linked 300,000 e-mail addresses and frequent shopper cards.


"What we've learned so far," Klug said, "is that since we're able to provide value back to customers, they're willing to give us the information in exchange."


Customers generally purchase about three items each week from an average of 60 offers, Klug reported.


SuperMarkets Online ranks among the top 10 online shopping Web sites, according to PC Data Online, Reston, VA, an online research firm. It also ranks favorably among food-at-home Web sites, Klug said.
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